Caracas, Nov 7 (EFE).- Venezuela is approaching a 2025, which experts see as turbulent and uncertainwith the beginning of the next six-year presidential term, after the questioned re-election of Nicolás Maduro, and the change of the United States Government, with Donald Trump at the helm, as two of the main events that will influence the economy of the Caribbean country.
According to independent estimates, Venezuelan gross domestic product (GDP) will grow next yearalthough at a lower level compared to 2024, which estimates closure between 3% and 4.5%, well below the official projection, of around 10%.
At the company Ecoanalítica predicts that the economy will grow up to 2.5% in 2025, while inflation accelerates to 70%, higher than the 50% estimated for the end of 2024.
According to the firm’s chief economist, Luis Bárcenas, problems will persist that mean that the GDP “does not finish taking off”, among them, the deterioration of public services, the lack of bank loans, the “aggressive” and “very repressive” tax scheme and the still “little” economic diversification, despite efforts by the authorities to overcome ‘oil rentism’.
Uncertainty
Bárcenas told EFE that There is uncertainty regarding what is going to happen inside and outside the country and, above all, how the US is going to conduct its foreign policy with Venezuela, subject to oil sanctions, although under a less strict scheme than two years ago.
On January 10, as established in the Constitution, the investiture ceremony will be held for the winner of the presidential elections held on July 28, in which President Nicolás Maduro was declared the winner by the National Electoral Council (CNE) for a third six-year term in power, which the majority opposition – which insists that its candidate, Edmundo González Urrutia, won – considers a fraud.
“Next year is going to be very complex, and not only very complex, but also uncertain, which is doubly dangerous,” said the expert.
Both Maduro and González Urrutia, exiled in Spain, insist that they will be sworn in as president.
For economist Luis Oliveros, the word ‘uncertainty’ marks 2025, mainly due to the future of oil licenses granted by Washington – which does not recognize Maduro’s proclaimed victory – to transnational companies, key players in the production of Venezuelan crude oil, which increased by 23.7% in one year, going from 762,000 barrels per day (bpd) in September 2023 to 943,000 bpd the past.
“We are going to have growth if these licenses are maintained, but (…) if they leave at the beginning of the year, this is an economy that falls into recession,” Oliveros told EFE.
If these permits are maintained, Ecoanalítico estimates that production will reach its “cap”, which it estimates at one million bpd.
Stability
According to experts, Venezuela depends today “more than ever” on crude oil to keep its currency – the bolivar – and prices stable, because its anti-inflationary policy consists, to a large extent, of injecting the currency market from, mainly, the oil revenues, in order to generate an oversupply of the dollar, used as a reference to quote goods and services.
In this sense, Bárcenas warned that the entry of resources may be affected depending on “the position that the United States assumes towards Venezuela” and whether “the internal political and institutional instability” persists, aggravated after the July elections.
Therefore, he explained that, if there are problems in the generation of foreign currency, there will be a risk of facing an “increase in the cost of living”, which will affect the Venezuelan’s pocketbook and, consequently, the “capacity for recovery.” of spending that drives economic growth.
Given this scenario, he believes that the country must show the national and foreign market “a willingness to change things or correct errors in economic policy,” which “can attract investments and open doors that many may consider closed,” in addition to encouraging that the US “does not assume such a radical attitude.”
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**Interview with Luis Bárcenas, Chief Economist at Ecoanalítica**
*Interviewer:* Thank you for joining us today, Luis. As we approach 2025, could you share your insights on the expected economic conditions in Venezuela?
*Luis Bárcenas:* Thank you for having me. As we look to the upcoming year, I anticipate that Venezuela’s economic landscape will be marked by significant uncertainty. While we expect a slight GDP growth of around 2.5%, this is against a backdrop of accelerating inflation, which could hit 70%. The economic recovery we had hoped for remains fragile, hampered by a variety of structural issues.
*Interviewer:* You mentioned structural issues. Can you elaborate on what challenges are particularly concerning for the Venezuelan economy?
*Luis Bárcenas:* Absolutely. Key challenges include the ongoing deterioration of public services, a lack of access to bank loans for businesses, and a rather aggressive tax regime that discourages investment. Moreover, despite efforts to diversify the economy beyond oil, we still heavily rely on hydrocarbons. This creates a risk where fluctuations in oil production directly impact our economic performance.
*Interviewer:* With the recent cooperation agreement between Russia and Venezuela regarding hydrocarbons, how might that influence the Venezuelan economy?
*Luis Bárcenas:* The agreement could potentially provide much-needed investment and support for our oil sector. However, the effectiveness of this cooperation heavily depends on the geopolitical landscape, particularly U.S. foreign policy towards Venezuela. If the U.S. maintains or alters its sanctions regime, it will significantly affect whether this cooperation can lead to tangible economic benefits.
*Interviewer:* Speaking of foreign policy, how do you foresee the new U.S. administration under Donald Trump influencing Venezuela’s economic situation?
*Luis Bárcenas:* Trump’s approach to Venezuela has historically leaned towards sanctions and pressure tactics. Should this approach continue, we would face significant barriers to economic growth. The uncertainty of oil licenses granted to international companies is paramount; if these are withdrawn, we could see a return to recession.
*Interviewer:* As a closing thought, what would you say is the most critical factor for Venezuela’s stability in 2025?
*Luis Bárcenas:* I would highlight the need for consistent and favorable international relations, particularly concerning our oil exports. Also, addressing internal economic vulnerabilities is crucial. Without both components working in tandem, we could find ourselves in a very precarious position as we move forward into 2025.
*Interviewer:* Thank you for your valuable insights, Luis. It seems the road ahead for Venezuela remains uncertain but full of potential if managed wisely.
*Luis Bárcenas:* Thank you for having me. Let’s hope for the best for Venezuela.
